5 Key Fraud Prevention & Protection Tips for Your Small Business
What Every Business Owner Should Know about FraudYou’ve worked long hours building your small business into the success it is today. What are fraud protection steps you can take to safeguard everything you have accomplished? Being a business owner means balancing day-to-day operations, managing employees and trying to grow your business. Though it might be difficult to prioritize, your employees and customers will thank you for setting aside the time to take proper security measures.
How Can I Protect My Small Business From Fraud?According to a survey conducted by the Small Business Administration, 88% of small business owners worry about cyberattacks on their businesses.
Whether your business employs just a couple of people or has a lengthy payroll, make sure everyone is on the same page about protecting sensitive financial information and not exposing customer data.
Fraud or cybercrime can show up in things like malware designed to cause damage, viruses that give criminals access to your information, ransomware delivered through fake emails, and phishing that uses email or a malicious website to infect your system.
You can fight back against cybercrime by educating yourself and your employees about red flags that might signal a phishing email, using safe practices like not emailing passwords or account numbers, and avoiding suspicious downloads. A good rule of thumb: when in doubt, do not download or click.
What are Common Types of E-Mail Fraud?One way fraudsters can gain access to financial and company data is through business email compromise. The sender of an email may have fallen victim to a phishing attach and the email you receive could actually be from a fraudster impersonating the sender. For this reason, it’s important not to rely solely on emailed instructions regarding the transfer of funds.
While you can’t prevent your customers or vendors from being the victim of fraud, you can get to know them and how they typically speak and write. Language and writing style not consistent with how they normally correspond could be a red flag that something might not quite be right.
SouthState Bank’s information security experts say uncommonly used words like “kindly” or awkward sentence structure can signal that an email isn’t legitimate. The fraudster may ask for a wire transfer or payment for goods in a manner that is inconsistent with pervious requests. Picking up on these indicators could prevent a full on breach of information.
Small businesses can be a target of fraudulent activity by having their website or emails spoofed. The Federal Trade Commission recommends using email authentication for your business email and making sure your email provider offers email authentication technology. If a fraudster is trying to spoof your email by adding or removing one letter from your business name to fool shoppers, authentication servers will catch the fake address.
What is Multi-Factor Authentication?If you utilize online banking or process payments online, two-factor authentication, also known as multifactor authentication, can help protect your financial information. Two-factor authentication adds an extra layer of security by requiring another step of verifying identity. This additional layer could be a fingerprint, key fob or a secure code sent to a primary method of communication.
Your employees may find two-step authentication a bit annoying at first, but it’s worth the effort to protect sensitive information.
What is a Protection Service?You may find it worthwhile to pay for a reputable and comprehensive monitoring service to keep an eye on your business’s financials.
Aside from your credit score, a monitoring service can watch if a fraudster uses your name or your business name to open a new credit card, report a late payment, changes your credit limit or even files for bankruptcy. Having this knowledge allows you to take quick action and prevent further damage.
If your business can’t yet afford a service, the Small Business Administration recommends free services such as a Cyber Resilience Review and Cyber Hygiene Vulnerability Scanning.
What are Easy Ways to Protect My Business from Fraud?Creating strong passwords is the first step in protecting your business from fraud. It’s recommended that your password contain 10 characters or more with at least one uppercase letter, one lowercase letter, one number and one special character. If you find it difficult to remember a complex password, try using a phrase.
Verify – and verify again – any requests or transactions that impact your or an employee’s financials. For example, if an employee requests that their payroll be redirected, always verify the emailed or ticketed request with a phone call directly to the person. It’s also a good idea to verify outgoing wire and or ACH transactions directly with the beneficiary instead of just a chain of emails.
Choose a business banking partner to help you manage your finances, pay vendors on time and keep your data secure. They may have services including balance or payment alerts to let you know money is going out, employee benefits to help you retain trusted employees, and spending reports to help you track your goals.
Use a Bill Pay system to help you maintain internal controls over business accounts, allow access only to select employees, review invoices and payment history, and schedule reminders for future payments. The FTC reports that fake invoices for office or cleaning supplies are a common scam. Having a Bill Pay system can help you track the vendors you regularly use and alert you if someone is sending you a bill for something you didn’t order. You should consider implementing positive pay system for both check and ACH transactions as these services provide protection against unauthorized checks and ACH transactions.
Cyber fraud can cost your business more than money. It can result in lost trust, reputational damage and more, so protecting your small business is of paramount importance, and SouthState Bank offers many solutions to assist. Learn more here.
Alex Keene manages the marketing, communication, profitability and development aspects of the Treasury management and payment solutions products at SouthState Bank. She has over 25 years of experience in Treasury management product management, sales, operations and payment fraud prevention. Keene received a bachelor's in economics from Southwestern University and a master's in project management from George Washington University.